Comcast Profit Rises on Package of TV, Web, Phone

Oct 26, 2006  •  Post A Comment

Comcast, the nation’s biggest cable operator, reported stronger third-quarter earnings as consumers snapped up its combination of phone, television and high-speed data service.

The company said net income increased to $1.2 billion, up from $222 million a year ago. Those figures include earnings from systems acquired from Adelphia and Time Warner, and a $234 million one-time gain resulting from the Adelphia-Time Warner transaction. Excluding the one-time gain, net income for the third quarter would have been $548 million, double the year-ago number.

Comcast CEO Brian Roberts said the jump in earnings may represent “an inflection point” for the company and for the entire cable industry, which is beginning to see significant and sustainable profits after billions of dollars in investment in infrastructure that supports phone service on top of video and fast Internet service.

“The triple play stimulates higher growth rates” for all of Comcast’s products, Mr. Roberts said, noting that the package has bolstered basic television subscriber growth, which has been a soft spot for cable companies for years.

For Comcast, digital phone has become a $1 billion a year business, Mr. Roberts said.

Mr. Roberts also noted that Comcast had acquired digital spectrum to give it protection in the area of wireless services, and was getting ready to aggressively market phone and data services to business customers.

The report sent Comcast’s stock up more than 4 percent, to $40.37 a share this morning.

“Expectations were high going into Comcast’s third quarter. Strong results-especially in voice and broadband-suggest that these expectations were well warranted,” said Craig Moffett, VP and senior analyst at Sanford c. Bernstein & Co.

Mr. Moffett noted that Comcast’s strength in adding high-speed Internet customers contrasted with results reported by its phone competitors, AT&T and Bell South. Mr. Moffett said the phone companies were losing customers who picked their less-expensive DSL Web access and who now are looking to save money on cable’s triple play. Other phone customers are defecting because they want a faster link to the Internet than DSL can deliver.

“It will take time much more than a single quarter to determine which of these two explanations is at work,” Mr. Moffett said. “If this is more than just a one-time phenomenon, however, we should see similar strength in the broadband results to be reported by Time Warner Cable, Cablevision and even Charter over the next few weeks.”

Comcast said it added 558,000 new digital video subscribers, 536,000 new high-speed Internet customers and 483,000 digital-phone customers during the quarter.

Advertising revenue rose 10 percent to $395 million in the third quarter, including strong growth in political advertising.

Comcast’s content segments, which includes its cable networks E!, style, Golf Channel, Versus, G4 and AZN, reported increased cash flow of 22 percent to $88 million on a 9 percent increase in revenue to $258 million.